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State and territory governments need to have greater accountability when it comes to offering investment incentives to employers, says experts at Melbourne Law School’s Centre for Employment and Labour Relations Law.
Dr John Howe says that while it is common practice for Australia’s State and Territory governments to offer investment incentives as a means of influencing the investment location decisions of private corporations, there is little, if any, consideration within the investment divisions of the relevant state departments as to the quality of the jobs created.
“Governments should really be measuring such investment by the quality of the output, such as wage levels, security of tenure and corporate recipients’ commitment to progressive and cooperative employment relations,” Dr Howe said.
“Furthermore, despite efforts to curtail competition for investment between States, there is evidence that footloose corporations are benefiting from State Government efforts to outbid other States for new investment.”
Dr Howe and Ingrid Landau will present the report, Do Investment Attraction Incentives Create Decent Jobs? A Study of Labour Conditions in Industry Assistance Contracts at a public seminar this Friday. The study looked at investment attraction deals by Victoria, New South Wales and Queensland.
Howe and Landau say that while there is broad acceptance of the goal of assisting business to create jobs, there is a dearth of publicly available information upon which to assess the connection between the billions of dollars used by State Governments in investment attraction and the creation of sustainable, decent jobs.
“These incentives consist of disbursement of public funds and foregoing of taxation revenue to the value of billions of dollars, frequently justified on the basis that the investment will ‘create jobs’. However, while State Premiers are quick to announce their success in luring large companies to the locality, they are less forthcoming about the details of any incentives they offered to secure the investment.”
The study found that with the information that is available, it is common for state governments to make assistance conditional upon employment projections, that is, the number and type of jobs the company will create in the course of the agreement. However the study also found that while states seek to ensure that any job creation targets are met by recipients through contract, concerns still linger over the regulatory model in place for such negotiations.
“The lack of third party disclosure as to the content of investment agreements and consequent lack of third party monitoring; and the lack of evidence as to enforcement of agreements are all inimical to basic precepts of good regulatory design,” said Dr Howe.